UBS GLOBAL OIL AND GAS CONFERENCE MAY 19-22, 2014
FORWARD-LOOKING STATEMENTS Certain statements in this presentation contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent filed Current Reports on Form 8-K available on our website, http://www.apachecorp.com/, and in our other public filings and press releases. These forward-looking statements are based on Apache Corporation s (Apache) current expectations, estimates and projections about the company, its industry, its management s beliefs and certain assumptions made by management. No assurance can be given that such expectations, estimates or projections will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this presentation, including, Apache s ability to meet its production targets, successfully manage its capital expenditures and to complete, test and produce the wells and prospects identified in this presentation; to successfully plan, secure necessary government approvals, finance, build and operate the necessary infrastructure and LNG plants; and to achieve its production and budget expectations on its projects. Whenever possible, these forward-looking statements are identified by words such as expects, believes, anticipates, projects, and similar phrases. Because such statements involve risks and uncertainties, Apache s actual results and performance may differ materially from the results expressed or implied by such forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Unless legally required, we assume no duty to update these statements as of any future date. However, you should review carefully reports and documents that Apache files periodically with the Securities and Exchange Commission. Cautionary Note to Investors: The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC's definitions for such terms. Apache may use certain terms in this presentation, such as resource, resource potential, net resource potential, potential resource, resource base, identified resources, potential net recoverable, potential reserves, unbooked resources, economic resources, net resources and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apache s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov. 2
STRATEGIC REPOSITIONING FOR NEXT GROWTH PHASE MBOE/D, Net 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 GOM International North America Onshore International Entry International Expansion N.A. Onshore Expansion 3
DECISIVE STEPS TAKEN IN 2013-14 Delivered portfolio repositioning GOM Shelf sale (retaining 50% of exploration portfolio) Egypt JV with Sinopec Argentina sale Canada transitioning Lucius and Heidelberg sale Accelerated North America liquids growth: +34% in 2013 Returned capital to shareholders Dividend increase: 18% in 13, 25% in 14 Repurchased $2.0 BN of stock thus far Strengthened balance sheet $2.6 BN debt reduction, ended Q1 2014 with $1.6 BN of cash 4
REPOSITIONING OBJECTIVES Focused portfolio: growth assets, free cash flow assets Powered by North America onshore Play to our core strength in operational execution Production growth: visible, predictable, repeatable Rate of return: liquids focus, relentless execution Internally funded capital program ex LNG Return capital to shareholders 5
REPOSITIONED PORTFOLIO North America Onshore GOM International 2009 1 2013 Pro Forma 2 11% 8% 8% 7% 10% 34% North America Onshore 14% 11% 17% 60% North America Onshore 3% 13% 20% Gulf of Mexico 14% 13% Gulf of Mexico 2% 14% 23% 24% 19% 18% 6% 537 MBOE/D (Reported: 583 MBOE/D 3 ) 50% Liquids 537 MBOE/D (Reported: 614 MBOE/D 3 ) 58% Liquids 6 Note 1. 2009 production has been reduced by Egypt tax barrels of 47 MBOE/D for comparability. Note 2. 2013 Pro Forma is less divested volumes from GOM Shelf, Canada, Argentina and Egypt without tax barrels excluding noncontrolling interest. Note 3. Reported volumes include Egypt tax barrels and noncontrolling interest.
APACHE TODAY 7 Proven leader in oil-levered North America growth: #1 growth generator in Permian + Anadarko basins Strongly positioned to drive the company s growth Major free cash flow assets: Egypt, North Sea, Australia: #1 positions LNG: incremental, company-driving free cash flow Industry shift to execution: APA s core strength Built to last: Rate of return focus Internally funded capital program ex LNG Sustainable growth: resource depth, repeatable running room Financial strength to execute our strategy
1 ST QUARTER 2014 RESULTS Adjusted Earnings: $1.78/share ($707MM) 1 Operating Cash Flow: $2.2 BN 1 N.A. Onshore Liquids Growth: 21% increase YoY Production: 640 MBOE/D Pro Forma Production: 548 MBOE/D 2 62% Liquids 59% N.A. Onshore 43% Permian + Central 8 Note 1. Adjusted earnings, cash from operations before changes in operating assets and liabilities are non-gaap measures. Note 2. Pro Forma represents first-quarter volumes less divested volumes from GOM Shelf, Canada, Argentina and Egypt without tax barrels excluding noncontrolling interest.
NORTH AMERICA ONSHORE POSITION Canada 2013PF Avg. Production 1 : 74.6 MBOE/D Undeveloped Resources: 2.8 BBOE Emerging Montney / Duvernay Shale Plays Permian 2013 Avg. Production: 127.1 MBOE/D Undeveloped Resources: 4.8 BBOE Expanding Horizontal Activities Central 2013 Avg. Production: 91.3 MBOE/D Undeveloped Resources: 5.2 BBOE Emerging Canyon Lime Play Gulf Coast 2013 Avg. Production: 30.8 MBOE/D Emerging Eagle Ford Shale Play 9 Note 1. Pro forma for divested volumes from Canada sales, including 2014 planned divestitures.
N.A. ONSHORE 2013 HIGHLIGHTS North America onshore liquids growth 34% Most active N.A. onshore driller in 2013 Averaged 79 rigs and drilled ~1,300 wells Outstanding organic production replacement and reserve growth Overall production replacement of 230% at $17 per BOE Permian = 323%; Central = 195%; Canada = 189% Permian and Central reserve growth of 14% each Substantially reduced costs in resource plays 1 20+ days reduced drilling 25%+ reduction in completion costs Overall resource increase to 14.0 BBOE Expanded Permian resource base by 1.0 BBOE to 4.8 BBOE 10 Note 1. Based upon Barnhart area Wolfcamp Shale improvements from 2012 through current.
N.A. ONSHORE 2014 PLAN 2014 E&D capital of $5.4Bn 47% Permian; 32% Central Avg. Rigs 85; gross wells ~1,400 ~875 horizontal gross wells 2014: 15% to 18% North America onshore liquids growth Driven by oil Continue delineation of liquids plays Gulf Coast: Eagle Ford oil Central: Canyon Lime oil Canada: Duvernay and Montney liquids-rich gas 11
N.A. ONSHORE RESOURCE BASE: VISIBLE, PREDICTABLE UPSIDE Eagle Ford Resources Under Assessment Pro Forma Proved Reserves 1 Total Resources 2 1.7 BBOE 14.0 BBOE Canada 21% Canada 24% 18% Central Central GC Onshore 4% 38% 54% Permian Permian 40% 12 Note 1. Proved reserves as of 12/31/2013 and pro forma for 2014 Canada divestures. Note 2. Resource estimates as of February 2014. Still evaluating Gulf Coast Onshore resources.
2014 CAPITAL PLAN North America Onshore GOM International E&P Capital = $8.5 Bn 1 North Sea $0.9 Bn 11% Australia $0.8 Bn 9% Central $1.7 BN Egypt $0.9 Bn GOM $0.5 Bn 6% 11% 20% 64% North America Onshore Canada $0.6 Bn 7% Gulf Coast $0.5 Bn 6% 31% Permian $2.6 Bn Additional Investment in LNG: Wheatstone $1.4 Bn Kitimat 2 TBD 13 Note 1. Includes E&D and GTP capital. Excludes non oil and gas capital of $0.2 billion and LNG projects. Egypt excludes noncontrolling interest. Note 2. Kitimat LNG investment = up to $600 million in 2014 based on current 50% participation. APA to right-size Kitimat LNG participation in 2014.
2014 PLAN FOCUSED ON ONSHORE LIQUIDS GROWTH Total N.A. 2014 E&D Capital = $5.4 Bn GC Onshore $0.5 Bn 10% Canada $0.6 Bn 11% 2014 Plan 2014 Project Capital* Avg. Rigs $775 MM Total Wells Permian 39 (23 Hz) 768 (297 Hz) 32% Central $1.7 Bn Central 32 (31 Hz) 418 (412 Hz) Gulf Coast Onshore 6 (3 Hz) 85 (49 Hz) Permian $2.6 Bn 47% Canada 8 (7 Hz) 121 (117 Hz) Total 85 (64 Hz) ~1,400 (~875 Hz) 14
PROVEN NORTH AMERICA GROWTH DRIVERS Liquids Track Record (B/D) BOE/D Track Record 160,000 140,000 Permian Central 141 250,000 Permian Central 218 120,000 200,000 100,000 150,000 80,000 60,000 100,000 89 40,000 39 50,000 20,000 0 2009 2010 2011 2012 2013 0 2009 2010 2011 2012 2013 15
#1 GROWTH GENERATOR IN THE PERMIAN BASIN MBOE/D, Net Average MBOE/D Added in 2013 20 19 Delaware Basin Central Basin Platform Midland Basin 18 16 14 12 10 3.3MM acres (1.7MM net) 127 MBOE/D in 2013 22% liquids growth 17% BOE growth 4.8BN BOE APA net evaluated resource (26% increase from 2012) 8 6 4 2 0 APA A B C D E F 16 Note: Peers include COP, CXO, DVN, OXY, PXD, and XEC; data sourced from company investor presentations and Wall Street research.
HZ WELL MANUFACTURING - LEVERAGING EXPERIENCE DRIVING EFFICIENCY ACROSS ALL DISCIPLINES Hz Drilling Operations Excellence Increasing pad drilling Sharing hz drilling best practices Frac Stimulation Optimization Aggressive frac staging methods Operations efficiency Focus on Recovery Efficiency Sweet Spot Identification Well spacing field trials Supply Chain Efficiency Self-sourcing sand and frac chemicals Bidding in size Water Management Innovation Industry leading frac-water recycling Horizontal Rig Count Central Permian Canada Gulf Coast Egypt Frac Costs - Granite Wash Sweet Spot Identification Self-Sourcing Frac Chemicals Frac-Water Recycling $/Lateral foot 17
MULTI-PLAY ANADARKO BASIN GROWTH ENGINE 58 YEAR TRACK RECORD Horizontal Well Liquids Drive APA s Growth % Liquids 20% 34% 50% 15 mi APA acreage 1.8MM acres (1MM net) 91 MBOE/D in 2013 122% liquids growth 49% BOE growth #1 driller in deep portion of basin Multi-play portfolio: Granite Wash, Tonkawa, Cleveland, Marmaton 5.2BN BOE APA net evaluated resource MBOE/D, Net 100 90 80 70 60 50 40 30 20 10 0 91 61 45 2011 2012 2013 18
CENTRAL TEXAS EAGLE FORD DELIVERING GROWTH 488,000 acres (182,000 net) 4 rigs running, ramp up to 8 by mid-year Drilled 10 wells to date Focused on driving down costs 3D seismic - over 1,000 square miles of new data acquisition in progress 150 250 Locations Large leasehold Infrastructure in place Existing water source Chalk / Buda potential 19
LIQUIDS RICH OPPORTUNITIES IN CANADA Kitimat Upstream Avg. 1Q 2014 Rigs APA Hz rigs (8) 4.1MM acres (3.2MM net) 74.6 MBOE/D in 2013 1 30% liquids growth 1 Apache Acreage House Mountain Kaybob West 5 Provost Avg. 8 rigs in Q1 2014 3,535 active wells (down from 9,613) Set in motion plans for additional growth in new liquids-rich areas Duvernay - 6 wells Montney - 2 wells Ellerslie - 4 wells 20 Note: Excludes amounts attributable to 2013 divestitures, 2014 divestitures and Kitimat Upstream. Note 1. Includes legacy Horn River production.
LEADER IN NORTH AMERICA LIQUIDS GROWTH 34% 34% 2013 % Growth 26% 21% 15% 5% APA A B C D E 21 Note: Peers include: Anadarko, Chesapeake, Devon, EOG, and Occidental.
N.A. ONSHORE LONG-TERM GROWTH PREDICTABLE, REPEATABLE, PROFITABLE MBOE/D, Net 450 400 350 300 250 200 150 100 50 0 2013PF 2014E 2015E 2016E Midpoint of expectation range displayed 22 Note: Pro forma for divested volumes from Canada sales, including 2014 planned divestitures. Canada includes Kitimat volumes.
NORTH AMERICAN POWERHOUSE Most active driller Track record of delivering consistent, repeatable growth Organic production replacement of 230% at $17 per BOE Substantial reduction of costs in resource plays Massive resource base Almost 14 BBOE Including 4.8 BBOE in the Permian Emerging resource plays under assessment 12% to 16% liquids growth over the next three years 23